Chinese small and medium-sized companies are experiencing a bull market, despite a broader decline in local shares. The Beijing Stock Exchange 50 index, which tracks innovative early-stage companies listed in the capital, rose 3.1 percent on Monday, marking a rise of more than 19 percent since October. This performance outperformed its larger, tech-heavy peer by 12 percentage points and the benchmark CSI 300 index by 16 percentage points, making it the bright spot in China this quarter.
The sharp jump on the Beijing board can be attributed to a wider range of fluctuation of 30% allowed for its constituents in either direction, compared with a range of as much as 20% for the Shanghai and Shenzhen gauges. In addition, investors’ light positioning in these companies and the regulator’s consideration of including eligible securities in the CSI multi-market index system are also seen as catalysts for this growth.
The Beijing Stock Exchange was launched two years ago with the aim of helping small firms raise funds and make China’s financial markets more diversified. Despite being one of twelve exchange-traded funds that track this index, it has assets of around 228.8 million yuan ($31.9 million), indicating modest investment compared to other options available to investors.